It is a matter of great joy, whenever theorists win the “Economics Nobel”. Here is the Nobel website on the Economics Prize:
The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2020 to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats”.
The new auction formats are a beautiful example of how basic research can subsequently generate inventions that benefit society. The unusual feature of this example is that the same people developed the theory and the practical applications. The Laureates’ ground-breaking research about auctions has thus been of great benefit, for buyers, sellers and society as a whole.
I will comment at length further. Two quick notes —
The website actually fairly understates their remarkable influence on practice. This is also a big triumph for engineering value — and a big moment for related fields of Operations Research in Market Design.
Auction Theory has been thought of beautiful, but somewhat impractical math, but the explosive growth in Computer Science and OR tools have really brought the practice to the forefront. Last year, Abhijit Banerjee, who is also an excellent information theorist having started his career, in theory, shared the Nobel for contributions to Randomized Control Trials and an “experimental approach to alleviating global poverty”. In 2012, Alvin Roth shared the prize (with Shapley) for contributions to Market Design issues — for solving straight up OR problems.
More later.